Back on the knife edge

Japan is back on a knife edge between a market plunge or market recovery as the banks work through debt forgiveness/write off. This is a story in three parts: first, why the market is so bearish; second, the grounds for optimism; and finally, the call on the banks, always the hardest call of all in Japan. Japan has suffered a long drawn-out bear market with a brief euphoric rise in 1999 underpinned by the belief that restructuring was at last being undertaken in earnest. The euphoria was overdone: the market peaked in February 2000 as profit takers moved in. This was exacerbated by the co...